A taxi is driven past a trash bin in central London, Monday, Aug. 12, 2013. Officials say that an advertising firm must immediately stop using its network of high-tech trash cans, like this one, to track people walking through London’s financial district. The City of London Corporation says it has demanded Renew pull the plug on the program, which measures the Wi-Fi signals emitted by smartphones to follow commuters as they pass the garbage cans. (AP/Lefteris Pitarakis)

In the 2002 movie, “Minority Report,” starring Tom Cruise, Washington, D.C. in 2054 has a citywide optical recognition system that actively scans the irises of all bypassers. Based on these scans, security alerts can be issued, controlled access can be granted and advertising can be customized to the person in real time. In the movie, Cruise’s character, John Anderton, was flagged and bombarded with advertisements the second he stepped into a shopping mall.

In the United Kingdom and the United States, steps have been taken to make this science fiction premise a reality. In London, recycling bins play targeted messages to passersby, due to cell phone tracking. A startup company called Renew has found a way to track the MAC (Media Access Control) address of any smartphone that passes within its range, accessing the owner’s available demographic information (such as statistical data, which may include age group and gender) and, based on this information and the frequency of the user’s passing a particular bin, show advertising relevant to the user.

For example, a rival coffee store may want to target patrons of a particular coffee shop. So the rival company buys advertising that specifically targets repeat customers. An ad-enabled recycling bin may play a standard advertising cycle to passersby, then switch to an ad calling to try the rival brand to a customer whose MAC address has been recorded repeatedly by that particular bin.

Kevin Memari, the CEO of Renew, argues that this type of targeted advertising is not immoral or an invasion of privacy. “From our point of view, it’s open to everybody, everyone can buy that data,” Memari told Quartz. ”London is the most heavily surveillanced city in the world…As long as we don’t add a name and home address, it’s legal.” One hundred ad-enabled bins were set up in London prior to the 2012 London Summer Games. 12 of these bins were enabled to scan for MAC addresses, as well, with all but one lining Cheapside — a retail-heavy street near St. Paul’s Cathedral.

Privacy intrusions

During the first month after installing the trackers, Renew recorded over a million unique devices. On July 6, the 12 bins identified 1,065,629 unique people, with 946,016 presence recordings, per the company’s documentation. Memari argues that as MAC addresses do not reveal the owner’s name or other personally identifying information, and as it is possible to avoid being scanned by turning off a device’s Wi-Fi capabilities, the technology is not intrusive. However, since a MAC address is unique to a device and cannot be changed by the end-user, and MAC addresses can be searched in public databases, asking a user to turn off rightfully-utilized services to avoid being scanned can be construed to be an unnecessary burden, and many privacy experts are arguing that such blanket scans are indeed intrusions.

The national retailer Nordstrom recently came under fire for scanning the Wi-Fi signals of customers’ smartphones in 17 of its Nordstrom and Nordstrom Rack stores nationwide. The company sought to create a foot map — determining how long a person, on average, stays in a department and what the most travelled footpaths are. This information, which Nordstrom called “anonymous aggregate reports,” would have been used to help better structure future stores, said company spokesperson Tara Darrow.

“This is literally measuring a signal. You are not connected to the signal,” said Darrow.

Euclid, the company that runs the scans for Nordstrom, argues that the information gathered can be utilized to personalize and optimize the customers’ shopping experience. “For example, if many customers are entering and leaving a store within 5 minutes, that might indicate that there is not enough staff on the floor or that lines at the register are too long. A retailer can use this insight to adjust staffing levels or keep more registers open,” said John Fu, director of marketing for Euclid.

Competing with the Internet

While opinion on Nordstrom’s actions ranges from disinterest and inferred approval to outright disgust, many privacy experts feel that this use of technology crosses a line. Many brick-and-mortar stores are finding it difficult to compete with online stores, and many have inferred it’s a matter of information. Online stores can track the products a consumer looks at, past shopping trends, ads most likely to solicit a click and even off-site browsing information through the use of cookies, or temporary user files that websites use to “remember” a browser.

“Brick-and-mortar stores have been disadvantaged compared with online retailers, which get people’s digital crumbs,” said Guido Jouret, head of Cisco’s emerging technologies group. Jouret argues that many stores feel that this is an unfair advantage and are taking steps to remedy this.

“The idea that you’re being stalked in a store is, I think, a bit creepy, as opposed to, it’s only a cookie — they don’t really know who I am,” said Robert Plant, professor of computer information systems at the University of Miami School of Business Administration.

Family Dollar, Cabela’s and Benetton have all rolled out the technology in their stores on a test basis. RetailNext, a San Jose-based retailer, utilizes the technology to track customers in their stores in real-time. Brickstream, a Georgia-based retailer, use video to record traced customers in order to measure foot traffic. “Watching where people go in a store is like watching how they looked at a second or third Web page” on an online retailer, said Ralph Crabtree, Brickstream’s chief technical officer.

London’s Realeyes tracks and analyzes facial cues to determine a shopper’s happiness while shopping or at the registers. St. Petersburg’s Synqera is developing software that can tailor advertising based on a customer’s gender, age and perceived mood. New York’s Nomi can link and download a person’s online profile to the store’s computers upon entering the store. Nomi would then update the profile with information perceived from the store’s Wi-Fi surveillance.

“I walk into Macy’s, Macy’s knows that I just entered the store, and they’re able to give me a personalized recommendation through my phone the moment I enter the store,” said Corey Capasso, Nomi’s president. “It’s literally bringing the Amazon experience into the store.”

Advertising and the law

One of the great headaches in advertising is that the wrong ad is being seen by the wrong person at the wrong time. In such a competitive market, a missed advertising opportunity can result in missed sales and lost revenue — not only to the retailer, but potentially to the advertiser. Online, intrinsic advertising solutions, such as Google AdSense, analyze a customer’s browsing history and show ads it considers germane to the customer’s viewing pattern. Real-world retailers and advertisers are attempting to do the same via these tracking methods.

The problem lies in the fact that this type of tracking is illegal. In the United States, court interpretations of the USA PATRIOT Act has ruled that the pinging — or determinations of signal strength — of an end-user’s device without the consent of the end-user (such as, in making a phone call) is a “pen register”: a tracking device that is controlled by federal law and can be used only by court warrant, and whose repeated use can be inferred to tell secrets about a person’s life that the person reasonably should expect to be private. In the European Union, all Internet services that track users must announce their intentions in their terms and conditions prior to any tracking attempt.

The City of London Corporation has called on Renew to stop tracking bypassers, which it has agreed to do. “I am pleased the City of London has called a halt to this scheme, but questions need to be asked about how such a blatant attack on people’s privacy was able to occur in the first place,” said Nick Pickles, director of Big Brother Watch, to the BBC. “Systems like this highlight how technology has made tracking us much easier, and in the rush to generate data and revenue there is not enough of a deterrent for people to stop and ensure that people are asked to give their consent before any data is collected.”

The post No Longer Science Fiction: Real-Time Targeted Advertising appeared first on Mint Press News.